Investing.com -- A recent report from The New York Times (NYSE:NYT) suggested that a deal to preserve TikTok's operations in the United States is close to being finalized, with a deadline set for April 5th.
An investor group, which includes Vice President JD Vance, is said to be in discussions to acquire a majority stake in TikTok’s U.S. business.
Per the report, the deal may involve changes to, or even the exclusion of, TikTok's pivotal content recommendation algorithm, which could potentially alter the platform's user experience.
The proposed agreement also suggests that TikTok's parent company, ByteDance, might maintain a minority stake, as long as control is handed over to U.S. investors.
In an effort to facilitate the sale, President Donald Trump has shown a readiness to lower tariffs on China and has floated the possibility of extending the April 5 deadline if needed to finalize the terms.
However, Democratic lawmakers have countered that the President does not have the legal authority to extend the deadline without Congressional consent.
“The TikTok algorithm is key to delivering highly personalized content and is a key driver of user engagement,” Bank of America (NYSE:BAC) analyst Justin Post said in a note.
“Without access to the recommendation engine, a new owner could face challenges in maintaining user engagement, a potential positive for Meta (NASDAQ:META) and Snap (NYSE:SNAP). We think terms around the algorithm will likely be a big part of deal negotiations,” he added.
Post believes that the potential revenue benefits of a TikTok ban in the U.S. are not currently reflected in the share prices of Snap and Meta, indicating that the market expects a deal to be reached.
If no agreement is secured by the deadline, a ban could likely result in increased engagement and advertising revenue for competitors, he said.
The analyst also notes that even if a deal is signed, any terms indicating a possible disruption to TikTok's operations could give a modest boost to other platforms.
